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Order in Product Customization Decisions: Evidence from Field Experiments

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  • Jonathan Levav
  • Mark Heitmann
  • Andreas Herrmann
  • Sheena S. Iyengar
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    Abstract

    Differentiated product models are predicated on the belief that a product's utility can be derived from the summation of utilities for its individual attributes. In one framed field experiment and two natural field experiments, we test this assumption by experimentally manipulating the order of attribute presentation in the product customization process of custom-made suits and automobiles. We find that order affects the design of a suit that people configure and the design and price of a car that people purchase by influencing the likelihood that they will accept the default option suggested by the firm. (c) 2010 by The University of Chicago. All rights reserved..

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    Bibliographic Info

    Article provided by University of Chicago Press in its journal Journal of Political Economy.

    Volume (Year): 118 (2010)
    Issue (Month): 2 (04)
    Pages: 274-299

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    Handle: RePEc:ucp:jpolec:v:118:y:2010:i:2:p:274-299

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    Web page: http://www.journals.uchicago.edu/JPE/

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    1. John List & David Reiley, 2008. "Field experiments," Artefactual Field Experiments 00091, The Field Experiments Website.
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    7. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    8. Wernerfelt, Birger, 1995. " A Rational Reconstruction of the Compromise Effect: Using Market Data to Infer Utilities," Journal of Consumer Research, University of Chicago Press, vol. 21(4), pages 627-33, March.
    9. Brigitte C. Madrian & Dennis F. Shea, 2001. "THE POWER OF SUGGESTION: INERTIA IN 401(k) PARTICIPATION AND SAVINGS BEHAVIOR," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1149-1187, November.
    10. Patrick Bajari & C. Lanier Benkard, 2005. "Demand Estimation with Heterogeneous Consumers and Unobserved Product Characteristics: A Hedonic Approach," Journal of Political Economy, University of Chicago Press, vol. 113(6), pages 1239-1276, December.
    11. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132.
    12. Xavier Gabaix & David Laibson & Guillermo Moloche & Stephen Weinberg, 2006. "Costly Information Acquisition: Experimental Analysis of a Boundedly Rational Model," American Economic Review, American Economic Association, vol. 96(4), pages 1043-1068, September.
    13. Ortoleva, Pietro, 2008. "The Price of Flexibility: Towards a Theory of Thinking Aversion," MPRA Paper 12242, University Library of Munich, Germany.
    14. Payne, John W, et al, 2000. " Valuation of Multiple Environmental Programs," Journal of Risk and Uncertainty, Springer, vol. 21(1), pages 95-115, July.
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    Cited by:
    1. Eric Johnson & Suzanne Shu & Benedict Dellaert & Craig Fox & Daniel Goldstein & Gerald Häubl & Richard Larrick & John Payne & Ellen Peters & David Schkade & Brian Wansink & Elke Weber, 2012. "Beyond nudges: Tools of a choice architecture," Marketing Letters, Springer, vol. 23(2), pages 487-504, June.
    2. Shefrin, Hersh & Nicols, Christina M., 2014. "Credit card behavior, financial styles, and heuristics," Journal of Business Research, Elsevier, vol. 67(8), pages 1679-1687.
    3. Tiezzi, Silvia & Xiao, Erte, 2013. "Time Delay and Support for Taxation," MPRA Paper 51233, University Library of Munich, Germany.
    4. Novarese, Marco & Wilson, Chris M., 2013. "Being in the Right Place: A Natural Field Experiment on List Position and Consumer Choice," MPRA Paper 48074, University Library of Munich, Germany.
    5. Altmann, Steffen & Falk, Armin & Grunewald, Andreas, 2013. "Incentives and Information as Driving Forces of Default Effects," IZA Discussion Papers 7610, Institute for the Study of Labor (IZA).

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